International aid and development finance, corruption risks and the need for more transparency

Two years ago, at the London anti-corruption summit, the former UK Prime Minister described Nigeria as a ‘fantastically corrupt country’. To which Muhhamadu Buhari, the Nigerian president, replied that corruption was indeed an issue while also making the important point that fighting corruption is a shared responsibility, including the UK. At a time when there are growing questions on the use of international aid and development finance money and its effectiveness, transparency seems more important than ever.

This week, hundreds of participants will gather in Copenhagen for the International Anti-Corruption Conference to discuss ways to fight corruption and promote greater transparency and accountability from decision makers. At Publish What You Fund, we play an active role in pushing major development actors primarily in America and Europe to be transparent about their activities.

Aid and corruption – What is the problem?

Last year, during his hearing, US Senator Rand Paul asked a question which we often hear in development circles: how much aid is lost to corruption? The answer to that is not factually known, but evidence suggests that actual sums of money lost to corruption (understood here as grand corruption) are small in proportion to the overall official development assistance budget ($146.6 bn according to 2017 OECD DAC CRS data).

However, corruption breeds in opaque environments and takes multiple forms. In that sense, international development cooperation is not immune to misuse, inefficiency and waste. We all have examples in mind, both from donor and partner countries. Responsibility is shared.

The development landscape is becoming ever more complex with a greater variety of actors involved and complex delivery chains. Donor organisations and governments have to respond to growing development needs across the globe. So if safeguards are not in place to make sure that aid and development finance reaches the ones that need it the most, this creates more risks.

Considering aid and corruption in the international development space therefore requires going beyond looking at ‘how much is lost’ and encourages us to ask instead: do we know where, how and for what purpose aid and development money was spent? Can we find out whether it reaches those in need and contributes to improving development outcomes? The response to these questions can only be achieved through improved transparency of aid spending and its outcomes.

What can be done?

Fighting against corruption and ensuring aid and development finance contributes to improved development outcomes requires greater levels of transparency and new ways to engage citizens to promote accountability.

The 2018 Aid Transparency Index results demonstrate that we now have more information about aid and development work than ten years ago. However, the 2018 Index shows that the pieces of information critical to assess project and donor impact (performance data) are the most difficult to find – if available at all.

Source – 2018 Index – % scores of all donors on each component

This is despite donors’ focus on setting targets, demonstrating results and value for money. When it comes to assessing their own work, the information remains very difficult to access. This makes it even more difficult to spot ahead of time when plans might be at risk – of corruption or otherwise – and to adjust accordingly.

The fight against corruption is complex and hard to tackle. But it can also start at home so here are three things donors can do:

1. Pro-actively publish comprehensive, detailed and timely information on aid and development finance.

Beyond some of the basics, the priority should be on providing the information necessary to assess impact and value for money. Making that information available in response to requests isn’t enough, especially to anticipate potential risks.

This is the purpose of transparency initiatives and open platforms or standards such as the International Aid Transparency Initiative (IATI), Open Contracting, the Open Government Partnership and others. These help address transparency across the delivery chain and provide information required to join the dots and get the full picture of aid and development finance.

2. Work directly with partner governments to support their efforts towards greater transparency.

This is particularly important for countries where significant portions of the national budget come from external actors. We have highlighted in a previous blog five ways to advance aid and budget transparency. Some countries, like Bangladesh, also have experimented with automatic imports of aid and development finance data in their systems with a view to reduce risks of withholding information, promote its sharing across ministries and strengthen the accuracy of the information used to draft national budgets and allocate sectoral funds.

Organisations like Connected Development in Nigeria have involved rural communities in the tracking of public projects and funds in the health, water supply, sanitation and hygiene sectors. For example, in Kano and Yobe states, communities have monitored EU-funded projects. Their community manager explained that access to data enables people to hold their government to account: “All of this information is very valuable for us to push at the local level. When there are delays we can ask questions and involve the community. It’s an important part of our process to push for responsiveness [from decision makers].” Experiences from other countries, like Ghana, have shown that, in corrupt environments, being able to demonstrate to the public that sanctions are being taken and rules enforced increases the chances of rebuilding trust between citizens and their governments.

The International Anti-Corruption conference therefore provides an important opportunity for decision makers and civil society organisations to discuss ways to mitigate corruption risks in international development and promote greater transparency. But these discussions should also continue after the event and most importantly translate into action and reforms – something Publish What You Fund will continue monitoring and supporting!